Case Studies Intel

8/6/2019 Case Studies Intel

1/52

The Impact of Intelin Costa Rica

InvestIng InDevelopment serIes

mu i a a I

gua a A cy

2006

Nine Years After theDecision to Invest


2/52

th mu i a a I gua a A cy (mIgA) f h W d Ba k g u wa i 1988 h f w f i a f i i d i bmIgA ff i ica i k i u a c c a i ib i f qua ifii d i b c u i . mIgA a ff ch ica a i a c a a d i ff c i a i f a ac i a d ai i f i di c iha d - ch ica a i a c f cu h i a y a a : di i a i f i f

i u i i a d bu i a i c di i i d i bh u h i ic ; ca aci y bui di f h a iza i a d i i u i ii f f i i ; a d, i faci i a i ac i i i u i

d i c u i id ify a d a ac i .

A a d H i b , p id f I fi i u , a c u i fi ba d i C a rica ha i f i di c i , c duc d a ch a d a d h i i ia ba i f hi ub ica i . Du i h i f I i i ia i i C a ricawa CInDe I p i Di c f h U i d s a .

C y i h 2006th W d Ba k g u /mIgA1818 H s , nWWa hi , DC 20433

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ma ufac u d i h U i d s a f A icamay 2006A ai ab i a www.i a . /i i _i _d /i c

F i f a i , c ac :mIgA o a i1818 H s , nWWa hi , DC 20433

. 202.458.9505 f. 202.522.2650www. i a.

th a ia i hi ub ica i i c y i h d.r qu f i i duc i f i

h u d b mIgA a h add ab .

C h c u y f I C a rica


3/52INVESTING IN DEVELOPMENT INTEL COSTA RICA

The Impact of Intel inCosta Rica Nine Years After the Decision to Invest

InvestIng InDevelopment serIes

mu i a a Igua a A cy

2006


4/52 INVESTING IN DEVELOPMENT INTEL COSTA RICA

Acknowledgements

thi ub ica i wa ad ib h u h h c ibu i f a y wh ha d h i c i a d i i h : Bi Ab aha (g a ma a , I C

Ac a (f ma a i Di c , CInDe); Da i A ia (f I ma aa d f C a Affai Di c , I C a rica); r b A a ia (D a , InC

Ba b za (C a Affai ma a , I C a rica); Wi ia Ca (Di c f hs c i , C a Ba k f C a rica); F. t Du a (f p id f CInDe, fmi i f F i t ad a d cu C a rica A ba ad h U i d s aedwa d (f g ba p a Di c , si s c i & D , I Clucia g (s i I C di a f e c ic , CInDe); edua d liza p id , C a Ba k f C a rica); gab i a l b (C a Affai Di crica); a d edua d sibaja (f mi i f sci c a d t ch y a d f Di

f CenAt).

thi i i d d i u a di cu i a d a i a di ia ci a d h i ac ic . I i a id a c c h i

bu a h hi h i h a i i .

th mu i a a I gua a A cy i , by a f hi ub ica iacc u i , bu i , fi a cia , i , a , ax, i c i , h

ic , a d ha b ib f a y u ai d by a y , cza i ha i hi ub ica i a a ub i u f uch f i a ad icB f aki a y d ci i aki a y ac i ha ay aff c y u bu i , y u h ua qua ifi d f i a ad i .



Table of Contents

Introduction .....................................................................................................5I. After the Intel Investment ......................................................................7

th p j c e ............................................................................................7l a i h o u i y ..............................................................................8

II. Post-Investment Impacts ........................................................................13mac c ic I ac .................................................................................13th I C i a ..................................................................................17C a rica I du y .......................................................................................20D a a d s cia I ac ...............................................................22

III. Conclusions ...............................................................................................25

sizi U h I ac ......................................................................................25Cha a d n x s ..............................................................................27l .............................................................................................................29Qu i f Di cu i ................................................................................31

Endnotes .............................................................................................................32

Appendices ..........................................................................................................351. Ac y a d Abb ia i ...................................................................362. th D ci i I : A sy i f A ac i Hi h t ch y

I I C a rica p a Ca s udy ..............................373. su a y r c da i .................................................................444. I i sichua p i c , Chi a .............................................................465. s u c f I f a i ............................................................................47

www. i a. ..............................................................................50



Introduction

si c I d ci i i i C a rica i 1996, h ca f h ba c-ic ia ch i h i y c u y ca i Us$300 i i ic duc

a b y a d (A&t) a ha b wid y c u d i h fi d f ii . A i y u ik y a ch, i i w k w ha C a rica id ifi d

a c fi wi h I h u h icu u a ch, a d h d a d wi hci i h w h c u y i c i a w u d ada h j c

qui . thi wa acc i h d wi h h ac i i f h hi h f i a h i f a a ai a i i i f c i i

ca i .

Y h w a d why I c d C a rica i a y y h b i i f a a ica hi y f b h ad ay c i i a dy a ic a d difficu ba i-

. ni y a af h i i ia j c wa a u c d, hi d i h aff d af h c i I C a rica a d i u u i ac , a y f whichw u x c d. B y d i b i u di c ff c h c u y c y i

f d ic duc (gDp), f i di c i (FDI), a dad w h, I i d ci i wa h ca a y f a a i f

C a rica c i i a f a a i ca i . C a rica w k du c fu y a d wi h a f u cy ha c h c u y ch ica

duca i , i c i aw, u a i , a d i f a uc u . o i h ff c c u db i a i d i c i a , a f cu d, a ic a ach

i i , a d i ch y c u , a d w y cu d FDIj c i h a d c . th I i a ach d fa i h

ca c u i y, aff c i duca i a d h c u y k w d ba , w k aca da d a d bu i cu u .

thi f cu h -i y a by aci a i f i ac ,di c y a d i di c y a ibu ab h i duc i f I i C a rica. A h

a i a j c i C a rica c d, h I i had a f u di ac . Y i xa i a a i d a i C a rica ucc fua ach cu i a i di idua j c a d u ai i u i wi

h c ic c u a d h FDI a i i ca .

thi ub ica i i a iz d i h ai c i , a wi h a a dic .t id c x i c I a u c i a 1996, h fi c i b i f y

u a iz h j c u i a d C a rica i ia y a d a ach f wi h i . th c d c i f cu

h i ac h , which a h u h a y i a d, ha b u d a

f w : h id c d i C a rica c y; i c i a ; i du y;a d fi a y, i h d f C a rica ci y, uch a i duca i . Fi a y,h hi d c i c c u i , a c a y d aw f a i u -

c i a d a k a cha C a rica fac a i f wa d i iff i c a FDI. A y i f h 1998 a I i i ia d ci i

i , A ac i Hi h t ch y I : I C a rica p a ,ub i h d by h F i I Ad i y s ic (FIAs) f h I a i a

Fi a c C a i /W d Ba k g u , a a a A dix 2. ( A complete copyof the FIAS study can be ordered at http://publications.worldbank.org/ecommerce.)



I. After the Intel Investment

th 1996 a u c by I , h w d a ic duc c a y,ha i w u d c uc a w Us$300 i i a b y a d a i C a

rica a u d c id ab i i h f i i c u i y. Wi h a uau f ha Us$20 bi i , I a w a achi w

i h gDp f i y C a rica, which had a u a i f y 3.5 i i .I a ca d f h ab i h f a ca u ha c u d acc dau f u a yi 3,500 i , ua y achi a i a dUs$500 i i i a i . th I i i dia y i

i a c u f ac i a h hi h f a d wi hi CInDe1,h i i a cy, which w u d h d fi a w a y a d

modus operandi i w ki wi h i .

The Project Evolves

th a f c uc i a A&t a i A i 1997 a k d h j c fiaj i , a d a ida i ha I wa a i fi d wi h C a rica

u a di i u a d h i c i a . I i i ia Us$300i i , fi d i i C a rica ab i h d h 52-h c a ca u

f h i a d a b y f I duc . th j c qui d a i a d2,000 y i w a .2 o h c u f h x a y a , I bui

h c d a , a d a u c d a x a i i i d i duca w duc a f . I 2003, ix y a af h fi a d, I

u f duc a b d a d d i C a rica d ab u 22

25% f h c a i a a . By 2005, wh I i d Us$260 i ii x a i i c ud a hi d bui di a d w ic i i ha d ic u , h C a rica ca u f c d a accu u a d i f Us$770

i i , y f 2,900 w k a d a addi i a 2,000 i di c j b .

Assembly and Test Operations

I oc b 2003, I a u c d i w u d i a xi a y Us$110 i ii a hi d A&t i f chi , addi 600 y h c u f

w y a . th a i i C a rica w c i u ab u ha f f I i i-ia y a d a b y a d c fi u a i , 3 i c udi w a a d a di -

ibu i c . th a a b a d h duc a f :

ic c , uch a I X p c ; d k c a c iu i (CpU ), uch a I p iu 4 p c ; a d chi ,4 i i ia d iJu 2004.

th hi d duc i wa i d wi hi a xi i faci i y, a d i id ica ia di i i chi A&t a i i ma ay ia a d Chi a. Chia c id d a a u -add d, ad a c d ch y duc . Acc di Bi Ab aha , I C a rica g a ma a , a b i a d i chii y i i f C a rica, b cau i i c a h a ic i a c f



h a i C a rica f h I C a i . W h ha Ci u aki ff ai ai a d i c a i c i i a hi y f d ci i ( i ).

gu za m hd A i, I vp a d A&t g a ma a , qu d i a 2003 a u c , aid ha h addi i a i "c fi h c fid

I C a i ha i h abi i y f h I C a rica a (aa i a ha h c a y wa c i u d i k y ducrica."

I i c i x , mik edwa d , x ai ha by I C a rica ca u i a y u a i wi h a d a i f u

w u d yi d i h i du y: h a i ac f h a d hi h ch y d i y, i i duc a d c

h duc i i u h ch y cu , a icu a y i ia u iza i , ffici cy, d a d au a i . U d h w a a

h iz f h hy ica a a d h u b f y ca aih a , a i i c a . Acc di edwa d , 18- h

cyc f c I c i ua y c fi u i a d f h quiw I A&t ca u ca i f u Us$1 bi

fa ab ba a k a d c u y c di i , a i i a f i C a rica i c id d ib .

Service Operations and Ventures

I 2000, I C a rica a x a d d i ic wi h i la i e i i s ic (lAes) g u , i c a i 100 i

ba i i u i ci cui d i a d a ida i , a d ab u 40c a i ab i c d f ic c . th addi i f a fi a cia

u i 2004 a k d a i i f idi ic f h

a i u f C a rica. I C a rica c y add d cu a da i a c x a d h ic u i , w c i i fi a a cf d a h ha d ic u .

I addi i , I Ca i a f la i A ica, a - u caC a rica, i cha d wi h fi di a d u i ch y c a ic I . I Ca i a ha i d i w f wa d

a i ca d i C a rica.

Leveraging the Opportunity

A uab y, h i dia a ic i ac ha I b u h wa a i ifica y b c u y i a f FDI. I had i a if a a C a rica a i i . th d h c d a d u a d c a i i h w d a d a u

ad i ch y cau d h c i i ak h c u y fficia i i a cy, u a

i a b ad a y ha w u d a ac addi i a FDI a d ad a c hc i i a a ca i .

Intel Costa Rica as a Free ZoneInvestor

th I C a rica ca u wa u a i w f z b cau i wa

a ca wi hi f hxi i i du ia a k . C a rica

F Z aw wa i d i c udab i h u id f a F Z

pa k a d a -i b fi . A af z i , I c i d C arica a da d i i c ia d ax ici , i c udi :

r 100% x i idu i aw a ia , c -

a d ca i a dr 100% x i ax

fi f i h y a , a d 50% h f wi f u y a

r 100% x i x ax ,ca a a d xci ax , a d

ax fi a ia ir 100% x i u ici a

a d ca i a axr n ic i ca i a a-

ia i f i cu cy a -a

r Fu y x di d - i cuc a a c

r Abi i y x wi hi

C a ricar Abi i y u 40% i h

ca a k wi h x if a ax

Source: FIAS Occasional Paper 11,1998



The Signaling Effect

th i a i ff c i w c iz d a d a cia d by i i c a i .I had c duc d i -d h du di i c b f ch i a w ca i , hu

a i h way f h i f w h c a i ad. th w haI had d cid d i fa f C a rica ad i a i a h ad i 5 a d i -

dia y u C a rica h i a f c a i a u d h w d i ch-y a d h c . Wi h h I a u c , h C a rica dia

b a f cu c a f i i a , f a u i I , hcific i a d j c , a d a FDI a d x . th i c a d f w f

i f a i a d by h dia h d ab i h h i a c a d b fif FDI i a c u y ik C a rica.6

Spreading the word. CInDe, C a rica mi i f F i t ad , J r i,a d p id J ma a Fi u w w awa f h w i h i I

i a , a d i dia y b a a i h a . I a y h i , CInDea ac d h a i f ch y c a i ha i u y had b

y c i h a cy u . th c i i w xhibi d c fid c ab u c i h c u y, acc i ff f c u y -a i a d x a y i i i , a d aki d w ay f a d. I

c a d wi h CInDe b c a i i ia , i wi h iai a h y w k d h u h h i d ci i - aki c . F xa ,b h Abb lab a i ( w H i a) a d p c & ga b (p&g) b ai d

a ida i f I a d a d cid d a ab i h a i i C a rica.(See Box 1: Government and Investor Support.)

High-level integration betweengovernment agencies and CINDE

si c 1997, h mi i y f Ft ad (ComeX) ha w k d cwi h CInDe f FDI a ac i proComer f x i

i f i a i i h x x cu i b w Com

CInDe. mi i f F i t ar i ha b CInDe p id

a y a . tw - pCInDe, F. t Du a , a b h mi i f F i

Box 1Government and Investor Support

I h f u y a b w 1997 a d 2000, a w ki a i hi wa f db w f i i , CInDe a d h . A i a - ub ic c

a h p id , a i i , x cu i f ab i h d ia d CInDe j i y d h c u y f i . thi c h i wa

y i ib wi hi h c u y, bu a ab ad. e ab i h d i , uch aI , Bax , C ai , saw k, B u , a d a Abb lab a i ( w H i a),W U i , p&g a d syk , ub ic y d d h c u y i ad h w ac

h U i d s a . th p id i a d i i y f h c -a i c y d a a f i a d i a i fac i . I

ac i y a ici a d i a y i a a a i a u j c ( ha wa )

w ki a d ucc fu , acc di I edwa d .

p id Fi u , a d a p id mi u r d u z, b ac d hc c f u ach, a y a ici a i a k y ak i

CInDe a iz d ab ad ach y a . I 1999 CInDe a h d Ceo ,i c udi C ai Ba f I , a a a a di h ca f C a ricab f ia i i h si ic va y. I 1998, wh p id Fi u

u d h w i c i p id r d u z, hi h- a ki x cu i ff i c a i w f a y i i d h c y.



Technology Cluster Focus

th a ac i f FDI a d a i a i wa d hi h ch y c aicu a y a d a c u a y, b ca a i a i i i ff h Fi u ad i i a i (1997-1998). I a i k w f

Ha a d Bu i sch , InCAe ( h C a rica bu i ch ), CInD

h d i h b way fu y a h u iqud by I a w f hi h a u add d a d FDI c

p id Fi u a d w d bu i a i micha pf c u d h y, a i h ubj c , ai a a ach wa d i d wi h h h f a hi k a k i

a d uida c f p .

A xa i a i f C a rica a i a d a y a d ihi h ch y wa c a y f a a a d h

ic u . Af a a a 1996, FDI a d x w a c ih a h f h c y, cia y wh h d ic a k wa f . thwa i i ad a a i a a a ufac u i , i u y a adi du y, a d c ff a d ba a a ic w u b i i a f fa . Du

i d, h p id f h C a Ba k, edua d liza , id ifi d FDIca a y f i a izi h c y.

Attracting big fish. CInDe i a ff i 1996-1998 i a i y f cu h c ic c : ab i hi a d c ida i I , d

c u by a ac i hi h- ch c a i a d h i hi du y a u d h . I hi c , I vp B b p a ad i d C

u u h bi fi h h d, f wi h xa f I a d, ai duc i k y c ac ha d fu h i . I 1f cu d i f ci h c ic c u by b i i u i fi du y, y f I , bu a f a a i ab i hth hi h- ch f cu a d CInDe i f i ffic i h

va y i 2000, a h u h wh fu d d c a d h a cy wa f c d ci ff h ffic i 2004.

Supplier Development

I i h f h i i c ic c u i 1997-1998,fficia , d by p id Fi u , i i d si a , ma ay ia, h p

a d Ja a , a d a d ab u h l ca I du y U ad (lIU) ah c u i . A ca u i ba wa a a a i c a

i ac h u h h u i i ff c , whi a h i a ch fh u h i h a d xi a u i a i hi . I C a

H a hca had b i a i i a u i a , i i

si a ec ic D B a d ca i du y a .

C a rica provee, a a d a h d ca u if a y au ch d i 2000. thi wa h u f j i ff by za i , i c udi CInDe, h Cha b f I du y, proComer ( h F it ad C a i f C a rica), h mi i y f sci c a d t ch y (m

a ici a i c a i uch a Bax , a d h I -A ica DBa k, which fu d d 50% f h c f h a wi h a - fu dabC a rica provee ha achi d ha 40 iab i ka f ca uwi h u i a i a c a i (mnC ), a d c i u a a w ki u d proComer.



Box 2Post-Investment Care and Policy Advocacy

th a ha a h ad d h c u y f w- h u h c i ad I du i h c di i a c ac i d d b c h -

s i C i f icy ad cacy a d i a i f c a yi i h i c i a . I addi i h l ca I du y U ad

a (i i ia y ca d mIl, a d a C a rica provee), w i a i i-ia i w di c d a h i c a i ba f i a d i .

High-Technology Multinational Companies Committee. t h ba a c h df w a d xi i ch y i , CInDe a d h c a d a

i a - ub ic c c i h cha f dback f xi i i .

l d by p id Fi u , h C i c a h i h p id iaH u di cu h d f i i h a i i .e ab i h d i , uch a I , m a, Bax H a hca a d C ai -

d h i c c . C i ad a h i w i dia yd a a k f h s i C i x cu .

CINDEs Investment Executives and the Post-Establishment Coordinator. A au f h ucc fu I x i c a d a i c a d f i f x a ij c i ca ha f f a FDI f w CInDe c a d

h i i f p -e ab i h C di a i 2000 au h ff f i a f acc u x cu i . A c u y a d i IpA ca ju a ac a f ii a d a i a , Ju i Ac a, CInDe ma a i Di c a ha i ,

aid f h a . th y ha id af ca i d f i

a d b c k i fa f h c u y. th x cu i ib fi di idua i a i hi , ca d I ex cu i , u a y wi hab i h d i , aki f h i d , a d cha i h i i u h

w c di a i cha f af ca ic . thi i i wa a ibf icy ad cacy, bbyi h f h c i u u i f

h a i i , h i u i a i fac i , c ab a iwi h h i , a d i .

Sector Diversification

Du i 1997 a d 1998, h u i h c ic i du y a d A ia fi a ciac i i a k d a a iza i i C a rica ha ia c fa - wi a d

i i c c u d b i ky i a a i i . m f CInDe c f hi h ch y j c a a d, a did h ibi i y f a di

a h mnC i c ic . F u a y, CInDe had a d i i 1997wa d a di ifi d i i a y af i i dica i

f a i di c i i i 1996. thi a y a d c ha w h wiady, a h ha x i w h, i c udi h dica d ic i du y a d

ca c . t da , hi di ifica i ha h d CInDe w a h d w ui c ic i a d x . CInDe ha b ab a ac i aa ch i i h c u -cyc ica dica c , i c udi Abb



lab a i ( w H i a) a d B sci ific, whi h i x a dxi i a i .(See also Box 2: Post-Investment Care and Policy Advocacy.)

I i w y a d c , CInDe u ica h iu d by I . th a cy a d ha ik I , h w adh c ha w wa ch d f h i a h i d ci i

a d h f h c a w d. CInDe a y fu hi c ud id- -hi h- d ic i i a d c . sub qu y

a d d W U i ch ica u c , p&g ha d ffic , syk ca c f hi a d t ady fu bi hi c , a

I wa p&g d ci i ha ac d a h i a ha h d b dh ic c i C a rica.



II. Post-Investment Impacts

B f h d ci i i wa ad , I i C a rica wa c a d awha i a wi i ,7 a f c ha ak b h a i iz , a ic-i a d i ac a d ik y i ( wa ) ac a di i f C arica c y a d ci y. F u f hi di cu i , C a rica waaff c d i f u ai a a : i c y, cifica y, i i FDI i f w ,gDp a d ad ; i i c i a ; i i du y; a d a a c f id a d ci y, uch a duca i .

Macroeconomic Impacts

Dubb d h I ff c , h di i a y a I j c a i h a C a rica c y a i dia y c a d di i i h

c u y ac c ic i dica . th di i b ca a a af I b a a i a d x i i 1998. ec i b a a u

h c y wi h a d wi h u I , i d u d a d h d f h hC a rica. thi f a a y i a d dua f ac c ic a-

i ic f C a rica, b h wi h a d wi h u hi h ch y u i a i a c -a i i a , i c udi I .

Table 1FDI Growthin Costa Rica1995-2004

(US$ millions)

1995 336.91996 426.91997 406.91998 611.7

1999 619.52000 408.62001 453.62002 661.92003 576.72004 585.0

Sources: Central Bank of CosRica, COMEX, PROCOMEICT, CINDE

100

200

300

400

500

600

700

8 4 85 86 8 7 8 8 8 9 9 0 91 92 9 3 9 4 95 9 6 9 7 98 99 0 0 0 1 0 2 03 04

Figure 1FDI Flows in Costa Rica, 1984-2004(US$ millions)

Sources: Central Bank of Costa Rica, COMEX, PROCOMER, ICT, CINDE



Foreign Direct Investment

A a id a d d a a ic i ac wa f i di c i i C a ri i f w a d i 1997 a d ky ck d i 1998 a d 1999.(See Figure 1.) A tab 1 h w , i 1998 a d 1999 C a rica c i d ha Us$600 ii w FDI, a i c a f ab u 50% h a a i 1996-1997. th

2004, I had i d ha Us$510 i i , i c udi i -iUs$110 i i i h A&t i f chi . thi j c h d bf w i 2004 Us$585 i i . th I ff c h c u y FDI i

ab d C a rica w a h h c ic d w u i h i ucha h c u i i la i A ica, fa i ju 7% c a d h

a a f 55% b w 1999 a d 2003.

Gross Domestic Product

th c u y d ic duc ha a b i i ica y i d h w i tab 2, gDp a d gDp ca i a u d i 1997 h u h 1999. I 19

C a rica gDp w 8.4%, bu xc udi I c ibu i , i ww y 3%. thu , ha 60% f gDp w h i 1999 c u d b di

a ibu d I .(See Table 3.)

H w , C a rica gDp a ha d I d w u . Wh Id d i ifica y i 2000, h c u y gDp w h wa h d juWi h u I , gDp w u d ha w 3%. thi x i c d h i C a rica ha c a i uch a I w ubj c cyc

qu y, h c u y d d di ify i i j c ia i , c a d a k . I 2002 a d 2003 I cau d i

i gDp w h, ba ica y i wi h h f h c y.

Table 3Growth of Selected Indicators (%)

1999 2000 2001Total w/o Intel Total w/o Intel Total w/o Intel

GDP real 8.4 3.0 1.4 3.0 4.6 4.1

Exports 20.6 3.3 -11.2 4.3 5.6 2.5Imports 1.9 nA 1.4 3.8 5.0 5.5

Sources: Econanlisis; What the Intel effect is all about," Actualidad Econmica,2001.

Table 2Costa Ricas GDP andGDP per Capita, 1995-2003(Market prices)

gDp(Us$i i )

gDp

Ca i a(Us$)

1995 11,722 3,3781996 11,843 3,322

1997 12,812 3,5081998 14,096 3,7621999 15,797 4,1162000 15,946 4,0622001 16,394 4,0902002 16,818 4,1122003 17,429 4,180

Source: Central Bank of

Costa Rica



Trade

B h i a d x w i u y i 1997 a d 1998, f c i h hi h f f z ac i i y. Du i h y a , I i f a qui

a d hi h- a u i dia a ia b d a w h i i . e

b f I a d a i a f z , x w x i ci u , a h w i Fi u 2 a d tab 4.

From golden bean to golden chip. F z x i 1996-1997 u a dba a a a d c ff , C a rica adi i a x ad . I ub qu y a ,I a d x i a u i u y u k w i C a rica. F xa ,du i 1999, I x d ab u Us$2.4 bi i i duc , a u i 36%

f h c u y a x . C a rica a x ach d Us$6.6 bi i , au u a d c d da . F z x ky ck d. I a id y b ca

h x i c a y, i chi b ca h x , a d c ic c - b ca h x ca y, a i a icu u a a d a -i du ia

duc a d a a fa b hi d. Du i 1998, du a ci cui ( c ic ) u -a d h adi i a x , uch a ba a a a d c ff . I a d h f

z x f - adi i a duc h d h d i h c u y f ad ha had u d f d c a i i a i a ic f adi i a

duc . I add d w x a k , uch a taiwa a d si a , a dfu h d d x a k uch a m xic .

C a rica c y ha d f duc i f i d b a (hi h-qua i y c ff ) h d chi . t fu h i u a hi d a a ic hif i hc i i f C a rica x : hi y y a a adi i a c ff a d ba a a

d 80% f x , a d day, - adi i a x 80%.I 1985, C a rica x a u d ju Us$1 bi i , f which 60%

Table 4Annual Total Imports andExports in Costa Rica(US$ millions)

I ex1995 4,089 3,4761996 4,327 3,7581997 4,970 4,2051998 6,239 5,5261999 6,355 6,662

2000 6,389 5,8502001 6,569 5,0212002 7,188 5,2632003 7,663 6,102

Source: Central Bank of Costa Rica, Customs,PROCOMER

95 96 97 98 99 00 01 02 03

3000

4000

5000

6000

7000

8000

Total imports

Total exports

Figure 2Annual Total Imports and Exports, 1995-2003(US$ millions)

Sources: Central Bank of Costa Rica, Customs, Export Promotion PROCOMER



60% Perishable products3% Electric and electronic

10% Textiles6% Precision, plastic, medical7% Food products

14% Other

28% Electric and electronic13% Textiles10% Precision, plastic, medical

8% Food products17% Other

2003

1985

24% Perishable products

w i hab duc . By 2003, x had w by a fi a di ifi d ba k f duc . p i hab duc had fa b

w ad , c ic a d c ic duc , i 28% f SeeFigure 3.)

Riding the Intel wave. B i i i F b ua y 1999, a d f ha a y a , C

rica c d d a ad u u f h fi i i 20 y a . C a rica bu b ca i a x i la i A ica. H w , wh i

bu i c di i f d, I x f Us$600-800 i i2000, 2001 a d 2002. Du i hi i d, I i i y a xc

x , i c a i C a rica ad d fici . thi ccu d du i diffica i a c di i , wh x w a i a d I C a rica wa

w, c y qui i faci i i . I c y a , Ia a d Us$1-1.4 bi i y a , i 17 20% f a xc u y.8

Intels Value Added

o h y a , I a u -add d ha b i a d i h a f i i y a , ba d h diff y f ca cu a i : (1) a af h a u f I a x ; (2) a h diff c b w hx a d i ; a d (3) a h a u I ay y a d

i . A a c a f x , I a ua a u add d i 20%, ab u Us$260 i i i 2005 a d a y Us$500 i i a ii i 1999. o h ca cu a i yi d a I u u f Us$200 i

diff c b w Us$1.5 bi i i x a d Us$1.3 bi i i i9 thUs$200 i i diff c c u d b i f d a a x i cu drica, I a i a i c ff c . e i 2000, wh x d

ff c wa i a d a h a . o h w id , ba d u i ay , h I a u -add d ha b i a d a Us$90-2

y a .Direct employment. I C a rica w y 2,900 di c w kb w 1999 a d 2004, i ai ai d a a a f ab u 2,000. A u h i ha I aid Us$44 i i i ay i 2005, i c udi ba

cia cu i y c ibu i a d w k c a i i u a c . ta 50% b aid ha adi i a a a a -i du ia , a d

ch ica adua a i a - c j b a a i . B f h adh d f h c ic c u i C a rica, c ica

i a d ch icia ia y had ca i : w k a - w d w a d c u ica i id .

Backward linkages and local purchases. I i a i a a h 2

i di c j b h u h i u cha f d ic u i . Whi cadi c a ia a y 2% f h a a u I x , wh a f d a d ic10 i c id d, u i u cha a i a d a

12% f x . I ca u cha f d a d ic a y ba f Us$50-150 i i .11

Belen community. I i ca d i B C u y, H dia, f hd d c u i i C a rica, a d a f f h c u y w

u ici a i i , B . B C u y a a 25% f h c uAb u 50% f h c u y h f y bud c f a a d a

Figure 3Costa Rican ExportComposition

Sources: Central Bank of CostaRica, CINDE



aid by ca i du y. I 1999 I u a i y b a ayi a f hc u y , d i h c a i x a u u d h f z

i . I ch ic f ca i i B ha a f d h c u y i h i-c f C a rica i f a uc u c id . I addi i I , B C u yh 87 c a a i i c udi w -k w u i a i a K af F d ,Ki b y C a k, a d Fi a d f a f h i a c -c u y

c u i c ic , dica d ic a d ca c .12

The Investment Climate

B f h j c i C a rica wa a u c d, I p a , vp f I a i atax a d lic i , id d hi a f h c u y i c i a :C a rica i a d duc , h aid. I ha a i h , y w

i h a d d i h . I , a hi ica d i , c id d h c u yi c i a uffici f h c a i ab i h a w a i iC a rica. H w , h a u c i n b 1996 wa c di i a , au ua ac ic f I ; h i w u d a ia iz y if C a rica d i d

c ai i i b w n b 1996 a d ma ch 1997. B h CInDe a dh wa d ff c i y a d I , bu h y did ha uch i

ak h c a y i i h i c i a . th y d d a iz h a k a ha d, x cu i a u u ua y fa a d u c fu a ,

a d w k di i y u h y w i h i .13 th u f h i ff i h i c i a i i f a uc u , i c i , bu i -

c w u d b c a acy a ai ab a f i a d d ic i iC a rica.14

Improving the Investment Climate

th c di i a c ac wi h I i u a d cific i had i dia ac i , i a i y i f u ai a a : ch icaduca i a d w kf c ki , i f a uc u a d u i du y, i a d

c uc i , a d ax a d i c i . th w xa f i ic a d c u i-ca i i f a uc u a d c uc i i i u a a f w f h a y fac

f i a i c i a fac ha C a rica add d. I a icu a ,h ff w u d h c ibu wa d h c u y i , a -a c du a d u a y y .(See Box 3: Enhancements in Costa Ricas

Investment Climate.)

Logistics and communications infrastructure. I i dia i ac C arica i ic a d c u ica i i f a uc u id d a i u ffu h d a d x ia w h i h i du i . I h y a

b w 1996 a d 2003, c u ica i a d i ic di i C a ricaa y d ub d, achi i a a a a ua c u d a f w h f ab u10%. I 1998, h a d h pub ic C c i law a wi i ai , a i a a d f i , a ici a i h c uc i a d a i f

ub ic w k , uch a ad a d . th u ad d, w d-c a ai f a - a d ca , whi i u d c uc i a d d i , ha i d

faci i i a d i ic f a a d ca , wi h hi h f qu cy f f i ha d h ca ab i h f adi i a i a ic id , uch aF dex, Ups, DHl, Da za a d AIg. Fa ai cu c du , u i hI , w a ab i h d a w f a 24-h u axi u ad- i .



C a rica a i d h qua i y f h c u y w i f a uu f h i a a i f w qui a d ch iqu ha d by

w u i ICe. A i a - ub ic a hi b w I a d ICe j i y a a a d u i h w B ub a i , which wa bu

wi h I fi a ci I a d. I addi i , a di c u d, hi h wa c a d f hi h c u i u f hyd c ic w .

Permits and construction. A a i d i i c a wi f i i a d c uc i wa c a y acc da I q

f h j c c uc i . A fi , b h h a d i ac a i h u h i wa i ib bui d I faci i y h qufica i a d i i . such a j c y ica y qui d w y a bui dw ki h wi h I , h c uc i a a d w w d

d i whi bui di i d c h j c i 11 h . wa a a d i i f a h ha fi c c i i Cc uc i c w f c d a i a i y w way. J

a c a i w k d a a a u d a a c ac . Wh wa c , C a rica had d i d i wi h a c d-b aki accid a h c uc i i . th acqui d k w-h w f fa , b

cu c uc i b ca h d c uc i ac ic a i d h j c i C a rica.

th fa - ack i i c d i d f I u d i h i a i a i a i i ifyi h c du f ab i hii C a rica. e i a u a y c du w a a

Changing the Governments Priorities

I d a a i a i u f cha i h way wi h i . I wa h fi i i C a rica ha a id a

ac i i FDI i a d a i wi h iFi u a d d /u da i a d h ab i hth id f cu FDI, a d ad hi i i h d f i

h f a hi h- a i a i i y h u h u h i i u i , a d f d a w f u cy i fficia

Service orientation. th i d f 1997 1999 wa a i i ic i i Crica hi y. I i c i ad I , C a rica xhib

wi c fid c ha h i a c u y c u d c f FDI a ba i , a yi w d-c a h d i i d by mnC , uch a I ath p id d i a i a d i i h d i i a w ca -d a d ic a i y a y f a d au u

i i , uch a h U i i y f C a rica (UCr), h t ch ica I

C a rica (ItCr), h na i a t ai i I i u (InA) a d h w a dc u ica i au h i y, ICe.

thi i i i id c d i h u f a abui di i i ia i . o a , a c i ad I w d ith u i i i ad i a cha h i cu icu a a d i duc u ba d I c da i . th a i Iacc h hi hway k y h h f c c fi i h

ia d h a i f i acc u d i a d x cu i , a a d ic -qua i y i ai i . Ai cu



Box 3Enhancements in Costa Ricas Investment Climate

I I i i ia qui f h j c , ha c i C a ricai c i a w i d i f u ai a a . th f wi i d ai

h i i ia ha c , a y f which w d i d c a a y i dia

u . I i h i c i a w a ai ab a c a i ,f i a d d ic, hu b c i a acy f I i .

Labor Force and Skillsr Hi h u b f ch ica adua ;r C a i f a 1-y a c ifica a a d a 1-y a a cia d f cu d

ic duc a ufac u i a d ic c ic a h t ch ica I i u f C a rica (ItCr);

r Hi h qua i y f ch ica cu icu a i ad a c d ic c ic ;r la ua ai i a a ItCr;r Hi h f ki i c uc i a d j c a a by ca c ac .

Tax and Incentivesr r i d F Z aw, i c udi h w ab i h F Z a i u id f a ab i h d F Z a k a d h addi i f a -i b fi ;r ex i , a d ua i i a i , f h 1% ca i a ax f a c a i , a i

c u d h w i f hi h ch y, which qui a ca i ai .

Permits and Constructionr p i fa ack, which a a way a i a i i ia i a d i -

ifyi h c f ab i hi a bu i i h c u y;r pa a c uc i i a d d y , y d h i c

bu a id f xibi i y ada du i h c uc i c . th acqui dk w-h w f fa , b a d cu c uc i b ca h d c -

uc i ac ic d , i c a i d h j c i h c u y.

Infrastructure and Support Industryr I u a d a a f h pub ic C c i law, a w f i a i ,

a i a a d f i , a ici a i h c uc i a d a i f ub icw k , uch a ad , , c.;

r W d-c a ai f a a d ca . Whi i i i u d c uc ia d a b a di a a a d d, a ha a ady b fi d fb faci i i i ch ck-i , i i a i a d ba a c ai a a ;

r I d i ic f a a d ca , wi h hi h f qu cy f f i h a dh ca ab i h f w d ad uch a F dex, Ups, DHl, Da za , AIg;

r Fa ai cu c a a c ia I a w f a 24-h . axi u i ;r Hi h qua i y w , du i hu d , du w qua i y qui

a d ch iqu au h by I x cu i y f w u i ICe;r p i a - a hi j i y bui d a d a a a faci i y, uch a h

ca f h B ub a i bui by ICe I a d, wi h I fi a ci a dj i u i i ;

r Hi h- i y a f ab u $0.05/kWh;r m d d u i du y: y did CInDe d dica y a h

ba I u i a ab u h c u y a d ab i h a i y i C a rica,bu a ca fi u ad d u y w d-c a c a i uch a I .


22/52

The Construction Industry

I had a i dia ff c hc uc i i du y, i u a i

h i du y c y du i 1997a d 1998. I 1997 a , I -

d ab u 37% f a c uc di du ia a a.15 By 1998 a uac uc i i c a d a aba i 25% f 1996 . By 2003,a ua c uc i i a wa50% hi h ha h 1996 y a a i .16

INVESTING IN DEVELOPMENT INTEL COSTA RICA

d d a fa c a a c c , u i h I . thi abhi h a da d f ic f h b fi f a f z c a i .

Costa Rican Industry

I i a a k d w h i cific c f C a rib i i wi h h i dia b h j c d i d i c uc iA - a d i di c i ac , h u f I i a i

h i c a d wi i f h f i c a i i di cC a rica a a i f a i . th c ic c u f u i hf i a d d ic j c , i c udi u i I , a w a

f xi i -I i . I c a d i i a h dica d ic c u , a d i i i i ica i f c d wi h ic j c x a i i i i

a d c y, i fi a cia ic , cu a d ch ica aBy 2004, h ca u i du y u yi I i c ud d 460 fi

a ia a d ic .

The Electronics Cluster

Wi h h a i a f I , C a rica b d i h i ci i ct day hi c u i h a a x c , i c a i55 c a i , f which 42 a f i . th c u y ab u 12,000 wa d x ha Us$1.65 bi i i duc a y a . th a

ic c , which I ad . mic wa c u ica i cf w , i c udi c a i uch a saw k, r c, a d m i ac, which i C a rica i 1996 b f h I i a d w x iat ady , a ic duc i qui a ufac u , a ab

hi ica d i d ci cui b a d ai a i af I abD i CInDe w - ch a d ff , h ba ad

ch y fi d u i h C a rica c ic c u af ch y c a i H w -packa d, IBm, s a a , W

a d Da a s ic duc i u y c id d C a rica f h ibu w ab i h d, ik y du i a a u h bad w u i 1997 a d 1998 ha c a d xc a ufac u i a d aca aci y w dwid . th c u a k a hi wh m a a d Dsc d h i C a rica c u ica i c a i , idi i i hi ba d a d. t da , I c i u b h d i ai hi c u , i f h c u x . saw k aa d #3, c i y, a fa u di a c d by I .

The Support Industry

Global suppliers. A di c c qu c f I i wa h abf a i ffic f a u b f ba u i17 b i i i 1998, idi

bui di b ck f h buddi c ic u i du y. m f u d c ac id a i y acc ib ch ica u f aa d i qui d I , d a a ic c

i a h I faci i y. A f w c u i ca d a



C a rica w k di c y wi h I . CInDe d dica d y a h i hba u i a ab u h c u y a d ab i h a i y i C a rica. si c

h , CInDe ha c i u d w k c y wi h ab i h d f i ia d u i c a i k , fi d w c i wi hi h c u y, a d

c u a w fi ca i C a rica. (See Box 4: Supplier Development ADifferent Type of Investment Attraction.)

Local firms. n y w w u y u a ac d by h I i ,bu a ca fi u ad d h i a i u y h w d-c a c -

a i i h c ic c u . s a C a rica c a i w c acwi h f i i , i c udi I . I w k d wi h ca c a i h

ai h i qua i y a d c c i i i d ba a da d , fxa , i ca db a d acka i . I hi a d, I b h h d i c a h

ca c f i x a d c ibu d wa d a hi h - f i u iba . I d d hi ca u i w k d i h fac ha i wa ab i i u wi h u du y, ax ic i u d C a rica f z i c i

i .

Box 4Supplier Development A Different Type of Investment Attraction

U ik a x uch a I , u i f i dia d ch h ica i ba d h iz f h ca a k f h i duc a d ic . thi

u a diff dy a ic i a ac i h i i a wi c u , ai C a rica, ha f x - i d a ufac u .

CInDe ff i d i a u i w k ha h d a ch i

i h c ic c u a d h wi c . I d i u i , ha cy wa fac d wi h a y ica chick cha : i ik d u i a ady i ac b f d cidi i , bu u i d d

a a k f ia buy b f aki h d ci i ca . F i a c ,CInDe di c d ha a ufac u ( u i ) f ic duc qui

d d ha a a h ia buy wa a i u a ca faci i y.I addi i , h i du y hy -dy a ic ac a ha a w c i ua y

fu bi h d a d ubj c ca i , qui u i i w d a y caa k a i c a f ux.

I ack i h cha , CInDe a d w k h u h C a rica xi ii back i k u i h . thi b u a ach qui dd i i which u i w a ady w ki wi h ab i h d i i

C a rica a d i h b h i h u h ca faci i i . tha cy di c d c a i i b w xi i i ac diffc . F i a c , b h c ic a d dica d ic c a i c ac d

wi h f h a u i f c a , a ic , ca db a d acka i ,a cha ic , a d h ic . Af id ifyi h c - cific d ci i -

ak wi hi h u i c a i , h CInDe a w k d b h c af h a c . I hi way, CInDe wa ab cu i a u i ha u -

d w h i b h h c ic a d dica d ic c u i C a rica.



th a cu y 13 ca u i f i fi , i c udi Iic c u , y i h a a f a w k, a ic i j c i

i i ic . A b ad ca u y w k f ab u 460 fiI wi h a a f h duc a d c ic . s ic acc uI ca u cha . p duc a d ic u cha d ca y i c u

a ia , i ic , ai a c f c a - , qui a d faci i

a i ch y (It) ic , a d i , cu i y, h a h ic , ca f h.

Developmental and Social Impacts

th c f I a had a i ac C a rica bu i cu uc u i y i a . A hi h y i ib a d i y , I wac i c ibu h c u i y a d a cia y ib c a18

cia y wi h a d cia a a d i a awaff ha had a i f u c h c a i i C a rica i ab

cia y ib ac ic , a h f u i i ff c

Reinforcing the Education Infrastructure

Technical education. I i i ia y qui d i i ch ica da a f i c di i a a . th u i f u y f ha c

a d f a w k f I c i ui c c a i wi h Ci i a d ch ica ch . Du i h i d f I ab i h

rica, edua d sibaja, mi i f sci c a d t ch y, c d ha Ihad i a y i a u h ch ica duca i i C a rica, h

h h c u y a f u da i i hi a a. s cifica y, i a ib y f c d i a i f a a d a i hi d i

b h h u b f adua a d h i fici cy. th a ai hi i c ud :

r p a a d ha c d cu icu a a h h aj duca i a iItCr, UCr a d InA, cia y du i 1999-2003;

r e i h i f c a a ItCr;

r th ab i h f a -y a c ifica a a d a -y a ad a ItCr f cu d w ch ica fi d uch a ic ducfac u i a d ic c ic , a d a , a ia ci c ;

r li k wi h UCr sch f phy ic a d ch ica a d ca i a

f c ic ;r su f h c ica , c ic , c u i a d i du ia

fi d .

The Creation of CENAT

A h a d d ,a h u h di c y a u f hI i , wa h c a i

f h na i a C f Hi ht ch y (CenAt) i D c b1997. F wi h d f si a , ma ay ia, taiwa a dJa a , CenAt wa a p id ia i i-

ia i i k ad a c d ci c a dc a i i h a a f It, a ia

ci c a d ch i , uch aa ch y, bi ch y a d

ad a c d a ufac u i . CenAtfu c i u d h ibi i y f

h hi h acad ic au h i i i

h c u y, h na i a C u ci f U i i y D a . A CenAt ai d wi h h ItCr a

a ch y.



Hands-on learning. I ha a d a d u d a b ad a f af ach a d ud i C a rica a y a d c da y ch .exa i c ud :

r th I I a i i educa i a , which ha d a d ic -c a u d a Us$1.1 i i d iz h ab a i i

ch .

r C u i achi a .

r I educa f h Fu u a , wi h a a ai 9,000 i a ya d idd ch ach i h ch ica a a.

r th "s ud a sci i a ha ci ific a ch ich . lau ch d i c di a i wi h h mi i i f pub ic educa i a d

sci c a d t ch y a d h i na i a p a f sci c a d t ch yFai , hi a ai ai 2,000 hi h ch ach ai ud i i ci c . th i a d c I i ab u Us$70,000.

Sharing Knowledge, Business Culture and Standards

Global standards. A a i a i a bu i d , I a ha h d a f i c a u a d cu u f ba c i i . I ha iz d

- a i , di ci i , u , i a i a d hic h u h cifica , uch a sha i h va u a d Cu u f I a d Y u

e u . I i d h a i y i h c i ua ai i f i y ,di h a i ab ad f hy ki -bui di i d . ex u

I c i i i , k w d a d w d-c a ac ic h dai h f a c a da d f i w kf c a d u i , a d i h dh i i u i ha i fac d wi h I du i h j c ab i h .19 A

a ch udy20

c c ud d a i ifica c a f I u i c i dai i f I ha cha d h i a iza i a ac ic hai duc d cha i h i duc a i y du I ... I had a i i ff c

( h u i ) a i . th u h difficu a u , I a f f bu i a u a d cu u i a c ibu i i c a d duc i i y a dc i i i C a rica, a b qua ifi d w k a d u i x d

h i ac ic a d k w d ba ac h c y.

High technology halo effect. A u d i a xa , I u di i d i C a rica ch y c h u h di c ac i ,

uch a h addi i f lAes, h i i u ff i hi ica dic , a d h u h i b fi , . ., ICe i j c i 2000 ff

ad a c d I ic .21 r b A a ia, D a f InCAe, b i I had

a i i ha ff c i c u a i u i d wa d ch ya d i a i . th u , i u , c a d a ch y a k f f wad a d a ai i c f a . p ha h i i ia i w u dha ua y a ia iz d, bu I c acc a d h c .

Worker safety and health. I wa a i f C a rica i h a a f w kaf y a d h a h. F wi I b ac ic , h na i a I u a c I i u

(Ins) h w k c a i i u a c i y a d a i u a cu i i C a rica c a d h fi a i a J b saf y a d H a h s a da d.

I b ca h b ch a k f h c a i ki f uida c , a d h

Saving the Environment

I ha b ac i i h a u a

. I C a rica, i ch u , I du ia F ih e i , a d

a awa I u d c u i y

a j c , cyc i i h c u i y a d ch

au ch d h j c , sap a . F xa , 21 Iu j i d B ch

c b a ea h Day a d h i a c f a

i h i ,

ad i d ach f duca i a c ff .



h w f h a a d i h i i du ia af y aa da d a d ac ic . I a y, I qui d i u i aac ic w k af y qua ifica i . F fi c cu

wa h d wi h h Ins awa d, p ic , i c i i f i ff accid .



III. Conclusions

I i a d c ha had a wh i y i i i ac C a rica, a i b h di c a d u i i ff c h c u y c y,i du y, duca i a i i u i a d bu i cu u . I qui da a i a i f h c u y i dia y u ad i i f a uc ua d ha c h i c i a h b fi f a i . th c f a ac i I C a rica h d ha h c u y i i

a y a d c ibu d h d f i IpA a d h way ii wa c duc d. Fu da a y w a i hi w f d b w

h , CInDe a d i , a c h i ha h d C a rica a d i a d fu h d i i h i c i a . I a i a h i ha u C a rica h ba a , a d

d a a i a a y i i i . Fi a y, bu a , Id a d i ad hi i a a f cia ibi i y. much f h i ac

ad by h i ca h c u y a u x c d b fi .

Sizing Up the Impact

th u b b hi d I i i C a rica ay h a i ud a ddi c i f h j c . th I A&t ca u i C a rica wa i i ia y a d

c a f u A&t a a d 3,500 y , ua y achi Us$500i i i i . A i cu accu u a d i f Us$770 i i ,h j c ha w u a d h a d a i , f c i ha

d ub h i i ia i f Us$300 i i . H w , h j c w a

a d 2,900 y (i c udi h i h addi i a ha d ic u i ) ai c id d ab u ha f h iz f a fu y a u A&t a i . thi izii du i a i y h a d c a i f w h i h It i du y, a d a

d , hi h ch y d i y a d duc i i y ha ab afaci i i duc wi h f w w k . I a y ca , I edwa d ha

aid C a rica i i a y u faci i y wi h h ia ach Us$1 bi i iaccu u a d i h u d c di i i .

I f c ic i ac , h u b a ai ak f h . I cy a , C a rica ha i ifica y u f d a h c u i i la iA ica i FDI. I 2004 i f w w Us$585 i i , c di 3.2% f

h c u y gDp. th i d f wi h i h w i ifica gDpw h, a i i c a i x , a d h wi a y i i u c ,

a h u h I iz a d u xa a d h d h f C a rica c icd w u . I i ib f a hif i h c u y x , f c ffa d ba a a c ic a d c ic duc . e c ic i w C a rica

a c wi h I a h a ay . th i du y y 12,000 a dx Us$1.65 bi i i duc a y a . th ca u i du y f I

a f c a ba f 460 u i a d Us$50-150 i i i ca u cha f d a d ic y a .



Unexpected Benefits

I a , h wi h a fi ha d k w d f h j c a hafu fi d I i i a x c a i , a d ha I xc d d h

h c u y, h a d CInDe:

Intel. I ha x i c d b h h b fi a d h d awback f ia c u y ik C a rica. th a a i h c a i

h Fi u ad i i a i a d CInDe aff ad i a i y a y a d ak h j c a ucc . H w , a a a k ay ha hi d

ff fi d ca u i a d uffici ch ica hu a u cy wi h ad a c d d i i i a d c u i . I

a a y ci cu c h a c f a i iz , a i a i ibi i y f h c a i a d i i u .

th c a i a di c d a u x c d b fi i Ci c udi :

r A hi h f i i a d f wa d ca ax c d, which i d x a i b y d a b y a d iica d ic ;

r A hi h f a a ia a u i y, ab i I ac a ha w y a , a h ha i u h y a , h x c

f hi c ;r Hi h f ca u cha i d a d ic ha x c

h ha a i d by y a .

Costa Rica. I i a d FDI i a ha b ad a a u rica a d i , a i c ic w h, hi h ayi j b , x

a k di ifica i . A a c i f FDI, h c u y ca c di

i f C a rica i a , d f hu a u c , fi i f h c u y i h ba c y, a d awa f hi c di i a d c i i . I u h d h c u

i i u i , a d C a rica d i d.

F C a rica, I i ac xc d d x c a i , wi h iac . I a y, C a rica ha b i i y u i d by I i fi ha d ic (ci cui d i a d a ida i , f wa dfi a cia ic , cu a d ch ica a i a c ) a w a i , f i i i a d a ch. each f h ic i

addi i a a h d ha I ca u .

Hindsight on Development of the Electronics ClusterI c i u b a a y u iqu i i C a rica. I a i

a ch y a ufac u w u d ha f w d I i Ch ca i I a d, a d w i h Chi i c f sichua . (See Appendix 4:

Intel in Sichuan Province, China.) Addi i a hi h- fi j c i h ha cibu d h c i ica a f a a ca u i du y

c u . A h u h I ha a ac d a a ba f u i f u f i u . s c i i C a rica ai ai ha I

a c a i C a rica wi h i i d i ka h f h c y



c f i a b y a d a i a w c ic u i i ff c .ty ica f aqui a- y a i , hi f i ua i i i c id d

i i i i a i h ca c y f x a c di i , cia y du ihi h a i i y.

I c , i i c a ha x a c di i i i ia y f c d u i i

ha CInDe had d d a d h "f a hi " j c . I fac , a y fii u y k d a h c u y, a d ad c i i , bu a

c id d. si c h , i ca b a u d ha I a d h hi h ch yi ay qui a d d u i du y f i a i a a d ca

d ha c h i u y chai a d u a a fu c u i ff c .g d xa f hi f c u a f u d i sha hai, ma ay ia, si aa d I a d. A h u h i i c a ha I wa ab d a u i ca

u i ba i c udi a u b f ba y c i i u i af i i i iai , i ay w x c h c u y ac i y f w h ii - u i w k . ty ica y, h u c u w h byfaci i a i k y i ka , a d by x di fi ca a d u a y i f u i ,

uch a h ff d h u h f z ch .

Challenges and Next Steps

Competitive Dynamics

A C a rica f wa d, i ia a ac a d a ch FDI ik y wib ha d by a u ua y i f ci dy a ic: a i c a i y c i i i-

f FDI a w d ca i h i h d by fi c c i i uf mnC w h i c . s a a y, h i a d a a ic c ida i f

a i i s u h ea A ia a d Chi a, du h a id w h f h a k ,

c ha a ha f f h i h A ica , a d b i ic . A h c di ia c a i a f-f di c y f ch y a ufac u i h , whichak i difficu f c u i ik C a rica di i f w

a d a d h i h i i i . C i i wi h h a k i a c au , h u h c duc i , c i i a d i i i . th fac ha

I i c uc i w A&t a i Chi a sichua i c w u d i dica adju i I i c i a y ha izi c a i qua i a i fac .

Building Advantage

I a c a ff u ai a d w i i , I C a rica ha

k d f way b i i i f wi hi I I a i a . By ayi c -i i , I a a u h a i w d , akih i u ai ab i h . A a u , I C a rica i

w f cu i ac i i i f hi h a u a d c xi y, h i i a h facha i a i ha hi h ab c ha h f i A ia c u a . thix ai h c i cu i i ic f x by I C a rica.

I i f i c i i cha , C a rica i c id d ha aia u h a u chai . th c u y ha u iqu ad a a : d

a k /cu xi i y, a ic hi i i ic ia A a ic pacific, a



i c a i u b f f i h , a d d i u a d cu iza i hh diff ia i ca i a i a da d hi h- u , w-ci A ia. F i a c , C a rica c u d b c a i f f wa d ai y, which w ak ac i m xic , l A a d mia i.

I addi i , CAFtA, h f ad a ia d b w hs a a d h C a A ica a i , i a i i drica.22 CAFtA cu ad acc h h U i d s a

x c d h u c ai y f i i d u d Ba i I i ia i , a u i a a c c i by h U i d s a .

Country Competitiveness Factors

C a rica ha a d ha k i i a i fi d af h y aqui c i ua a i i i i c di i ,

a y wi h a i a i C a rica a u i ab u 50%f w . Acc di Du a , c i i i a ic, bu a

y day f y u if . I a d h mnC ha ha d wi h fficiarica h i b ch a k d c a d c di i f ca i u d c ia u d h w d, i a i h i c i a fac i C a rica i . th b ch a k a i , dy a ic sWot ( h

/ u i i / h a ) a a y i , a ai which C a rica ca ci i c i a a a acc a d ac .

s a i i u i u a h y f fac ha ay aff cc f FDI i h a fu u . Whi cific C a rica i ua

xa a a f ca i w dwid , b cau h y a aa u f ba c i i . th i c ud : (1) h c a

ab f xibi i y; (3) ad a c d c u ica i ; a d (4) ad a c d i

duca i .r Corporate tax rate. th W d t ad o a iza i (Wto) a da ha a

x - i d i c i b i i a d by 2009.23 C a rica f zi c i a x 100% c a ax x i f a u bWh i i a d, i u d h i w u d f ayi15% c a ax h cu a f 30%, a i ifica di i ca 15% ax a ay b c id d u h ic ab i h d i

ay x a d.

r Labor flexibility.Cu ab aw a i h -h u w k day, whica i , aki i x i f c a i

C a rica. F wi h ucc fu d u d which i a

c u i , I ha d f u 12-h u day b adjui du ia ac i i i a d ach hi h c i i i Cdifica i h ab aw ha b d ha a w c

hi w k diff ch du , a a h w kw k h u . s a a a a i i C a rica a ha qu

f f xibi i y.

r Advanced telecommunications. I ha b u d ha i i Crica w u d b fi f hi h qua i y, y w c c uF xa , y i c f a i qui i I a i



ia h I a i a i a da a i a i h I aa u d h w d. I d i c a h i c i i , a a id y wi

u b f f i a d d ic i i a c qui a ca aci ya d d i da a, ic a d id a i i , a w c .

r Advanced engineering education. th duca i a a da d i i ia y u iac by C a rica acc da I ay d u adi a i

i hi h - a u add d duc . th i duc i f I C a ricala i A ica e i i s ic u d c hi i i y; h u w

qui y wi h ma a d phD d i i i . Bach d ic cia u a24 ay b uffici f hi ica d

i i a d a ch a d d fu c i .

Lessons

Whi I i C a rica wa a a , hi h- fi j c , h f hx i c a h wid y a icab i h ac ic f i -

i , cia y wi hi h c x f a d i c u . (See also Appendix 3:Summary Recommendations.)

Leverage the strategic project as a flagship investment. o a ic ij c ca ak a hu diff c i idifyi a ca i c i i i i .

I h ca f I i C a rica, h di c c ic i ac , u i i ff c a di c i a ha c ha d a i f a f h ca i

wi FDI. th i ac w b h i h i h j c i f, a d hu f ub qu ff by C a rica c a a a u i y. H w ,

whi d j c ca b u d a a i f a , i i a d i i f.C a rica x i c wi h I u ha h a d a ach di c d a

a di h i i ia i i qua y c i ica af h fac fu y a hu i y h i . o c h i i ad , bu cia y

i h ca f a a , hi h y i ib i i ia i uch a I , i y h

a f a i c ai ai c i i ha qui a a i ai i y a d a y a h hi h f . I a way, hi b c ac i u u cyc if h IpA a d i c u y ak a ia fu y a

h u i y.

Stay abreast of investor requirements and continually adapt the investmentclimate. gi h dy a ic a u f h c i i i a d x a

a k c di i , a i h u i y a u ai d i d b c ai a . B y d h i i a a b y a d j c , I i

wa i a i i ub qu addi i f hi ica d i i ic ,f wa d , fi a cia ic , cu , ch ica a i a c a d

u ca i a i . th j c , h w , ha ach d i fu ia , ha h c u , c y , fu y d d. I C a rica w fac

i c a i u w c , a d i ai i wa d hi h - a u add dac i i y wi hi I I a i a . t ay cu wi h i qui , a yca i i c i a u b c i u u y a ua d a d ada d.

Coordinate support among existing investors and the highest levels of gov-ernment. C a rica a ach i w ki wi h I ff a d f c a d

duc i c di a i wi h i h u h u h a f h i .th i d I a d h i a d ac d u h i i u .I ab i h d a i i u i a f a w k du i h c f uadi a d

ab i hi I i 1996 h u h 2000 ha d ucc fu i achi i



i i u . thi f a w k i c ud d cha i uch a h ui a s i C i , a w a a a i a f cu FDI i

hi h- i f h p id a d h fi u , a y a d i . H w , h a i a f cu FDI, h a i ud u d c h I d a , h s i C i a d h chi h- ch y c a i w ab i h d a a i i u

u i i , a d f cha i ad hi a d

Develop a strategy to establish service and supply networks for priority sectors.I i C a rica x ifi h i a c f cu i a i h u

h a ch i i i h wi c u . s a abui di a ib a u i w k w y d i C a rica, bu wi h u d a di ab u xi i i . I qui d

i ca i C a rica, a d CInDe fi w k d a ac duc ik I . th a cy di c d ha u i f d d

ca y ba d c i wa a i u h i C a rica. Cd i d i wa c a y w k wi h xi i i back

u i f duc a d ic ha w u d a c d c . thf i i a i a ch, c a i i w id ifi d b w di

a d c ic , f i a c , i h i cu f c a ia d a cha ic . thu , h d f h c ic c u a

f d h dica d ic c u , a d ic a, idi aa i a f h i i ia I i .



Questions for Discussion

1. Wha w h aj di c a d i di c i ac f I i iC a rica, a d which d y u hi k w i a i a ac i fu hi ? Which d y u i a w h i a f h c u y

c ic d ?

2. Wha a c f C a rica i c i a qui d i id f I fi a iz h d a ? Why w h i a I a d i

bu i a y?

3. H w did h C a rica a d CInDe a h iaf I i i ia d ci i i wa ad ? I c , wha w h

i a a a f ac i i y i u ai i h I u ? I y ui i , a h ac i ak by h a d/ CInDe ha

w u d ha fu h a d hi u ?

4. Di cu h f h i a i ff c , h ha ff c a d h u i-i i a i h u i y a i a FDI j c . gi

hy h ica xa f h w h ff c ca b cha d ua ic FDI a .

5. gi C a rica x i c , wha cific ac i ca b ak hu a fa ab w d- f- u h f c f xi i i ? H w

h u d h i f i f c a d u b uc u d a daudi d/ i d, a d by wh ?

6. H w did I i ac h d f h ch y c u i C a rica?Di cu h cha ha CInDe fac d a d a i u a ach a ac ib h a duc a d u i a a c u .



Endnotes

1 CInDe i h f a C a ici C a ic d I icia i a d D a2 th w a c a d 37,200 qua i w c uc

a xi a y 400,000 qua f . 3 I fu A&t c fi u a i i C a rica wa i i ia y a d

da f u a a d 3,500 y .4 Chi a c ic c u d u a i c a

f a c f h ic c i d k , wi h u i , audia hic , c u ica i , a d wi fu c i .

5 CInDe wa u c fu i a i ub ici y.The Wall Street Journal ub-i h d a hy a ic , C a rica sa pi ch lu Hi h-t ch gia

I a d mic f , f a u i p id Fi u . o h ub ica ih y f C a rica a a ca i f hi h- ch i , i

Newsweek , Industry Week , The Journal of Commerce, Export Today, World Trade,

Global Finance, The Inside Line, Continental a azi ,Investors Business Daily a d si ic va ySan Jose Mercury News. CInDe a d h I iw f a u d i i a i a d ub ica i , uch aWorld Investment Report f h U i d na i C f c t ad a d D(UnCtAD) a d ca udi f FIAs/W d Ba k/Ha a d a d thu d bA ica g adua sch f I a i a ma a .

6 r b A a ia, D a f InCAe, ha aid ha I i i ia d a i if h a i hi b w a mnC a d h i C a rica.

7 B b p a , vic p id f Fi a c a d Di c tax, Culic i a I , a a d i A ac i Hi h t ch y IC a rica p a by D b a s a , F i I Ad i y sI a i a Fi a c C a i / W d Ba k g u , 1998.

8 I x w Us$1.03 bi i i 2004 a d Us$1.34 bi i i 2009 e i a u d a by Ad i B , i hi a ic , Wha h Iab u , Actualidad Econmica a azi , 2001.10 I u a a f ic i h a i f i C a rica

i c udi cu i y, i ic , f d ic , c.11 I Actualidad Econmica, I ca u cha i 1999 w i a

ab u Us$150 i i , i c udi y a d c u ica iaid ICe.

12 o h c a i ca d i B C u y i c ic i c ud : tB u /t i , r c, saw k, a d m i ac; i dica d ic : H( i u y Abb ), B sci ific, mcgha a d C a ; a dc : syk , su a, s , la ua li a d h .

13 F d ai h i c i a ada a i ad by C h cca i a a , A ac i Hi h t ch y I

C a rica p a by D b a s a , F i I Ad i y sI a i a Fi a c C a i /W d Ba k g u , 1998.

14 th ha c a i d qua y f i a d d ic c a irica C i u i x ici y id f fai a f a

a d f i i , a i a i y, ac , i i , c.15 A d by h C a rica Cha b f C uc i .16 A d by h C a Ba k f C a rica.17 th i c ud d ph ci cui , ntK, ti , rvsI, DeK a d pyc , a

h .



18 I c i d ub ic c i i a d u u awa d i h a a f ciaibi i y, i c udi h A Cha e i a Awa d i 2001 a d 2002,

h A Cha g a d p iz f C u i y s ic i 2003 a d 2005, a d hCha b f C c Awa d f C a s cia r ibi i y i 2005.

19 th i i u i i c ud CInDe, mi i y f F i t ad (ComeX),mi i y f sci c a d t ch y (mICIt), h na i a t ai i I i u

(InA) a d h t ch ica I i u (ItCr).20 A ci d by A d r d u z-C a i C a rica D s a yba d Hu a Ca i a a d t ch y: H w i h , h i ac f I , a d f h c u i ; w i f hHuman DevelopmentReport 2001, UnDp, F b ua y 2001.

21 ea y , I had ad i d C a rica quick y i h a a f I ic . A h i , I ic w xc u i y u d rACsA,a wh y w d ub idia y f ICe, h id f c u i-ca i ic . th d cid d a h i a c f C arica I ff i , i d id ba dwid h a d d.

22 C a A ica F t ad A ; i c h D i ica r ub ic j i da , h A i w ca d CAFtA-Dr.

23 A sub idi a d C u ai i m a u , a d by Wto

b a h D ha mi i ia C f c . th i a au a ic w -y ax i af 2007, which ca b h d u qu by qua ifyiWto b .

24 thi i a fi ix-y a u i i y d , b y d Bach , bu b wma d .



Appendices

1. Acronyms and Abbreviations

2. The Decision to Invest: A Synopsis of Attracting HighTechnology Investment Intels Costa Rican Plant CaseStudy

3. Summary Recommendations

4. Intel in Sichuan Province, China

5. Sources of Information



Appendix 1Acronyms and Abbreviations

This appendix includes further explanation of abbreviations used in this publication,including full names in Spanish where appropriate. In some cases, a short description of the meaning is given rather than an exact translation.

A&t a b y a d Atp a b y a d aCAFtA C a A ica F t ad ACAFtA-Dr C a A ica F t ad A af h D

r ub ic j i dCenAt C naci a d A a t c a, na i a C f

t ch yCInDe C a ici C a ic d I icia i a d D a , h

rica I B a d; C a rica IpAComeX mi i y f ex a C c F i t adCpU c a c i u i , h b ai f h c uFDI f i di c igDp d ic ducgnp a i a ducICe I i u C a ic d e c icidad, h a - w d

c u ica i au h i y i C a ricaICt I i u C a ic d tu i , h C a rica t u i BInA I i u naci a d A dizaj , h na i a t ai i IInCAe I a i a u i i y ba d i C a rica ff i

aIns I i u naci a d s u , h na i a I u a c I iIt i f a i ch yItCr I i u t c ic d C a rica, h t ch ica I i

C a rica

lAes I la i A ica e i i s iclIU l ca I du y U ad amICIt mi i y f sci c a d t ch ymIl C a rica l ca I du y U ad amnC u i a i a c a ip&g p c & ga bproComer p a d C ci ex i , h x i a

C a rica i c 1996Cr provee C a rica i y d ca u i f i i

ab i h d i C a ricarACsA s a - w d c u ica i c a y ib f h

a u ch y c u ica i ic , uch a fI , i a i a d dica d a d i ; a 100% ub

ICeUCr U i i y f C a ricaUnCtAD U i d na i C f c t ad a d DWto W d t ad o a iza i



Appendix 2The Decision to Invest: A Synopsis of AttractingHigh Technology Investment Intels Costa RicanPlant Case Study

This appendix is a synopsis of Attracting High Technology Investment: IntelsCosta Rican Plant by Debora Spar, a paper published in 1998 by the ForeignInvestment Advisory Service (FIAS) of the International Finance Corporation/ World Bank Group. Many of the lessons concluded in the FIAS case study remainhighly relevant in todays practice of investment promotion. As the basis for anongoing case history, it provides critical context for MIGAs discussion of the Intelinvestments impacts over time. Information about Costa Rica and Intel con-tained in this synopsis is historical, and therefore may not be representative of the current situation. (The original paper in its entirety may be ordered at http://publi-cations.worldbank.org/ecommerce.)

Background

th 1996 a u c by I , h w d' ad i h ic duc i du y,ha i w u d c uc a w Us$300 i i ic duc a b y a d

a (Atp) i C a rica a u d c id ab i i h f i ic u i y. I a ua u w Us$20 bi i a ha i , -

i h i h i a i a duc (gnp) f C a rica, whu a i wa y 3.5 i i . th c uc i bud f h faci i y dwa f d by

a fac f ix i h a a ua f i di c i i C a rica. tha x w x c d d ub h a i x by h y a 2000.

Af i duci h w d fi i ic ic c chi i 1971, I -d a 85% ha f h ba ic c a k by 1996. I wa a

h i fi ab ha h ic duc i du y a a , a a u d

by u ca i a . th h a f I a y i d u i i ch icaad hi c i ua y i h f a c f i ic c , a d aa k ad , x ac h hi h fi a i f w ch y ad a c

b f h duc w u d ua y b c c di iz d a d ubj c icc i i . I f u d , g d m , c i d h w-fa u m law, which a d ha h c i w f c u chi ca (a d h u d)d ub y 18 h . I h ac i h i du y by i duci

w fu chi , a i fi i h a y h af a i h i a ii h a k ac , a d i i a id ucc i c i ua y i i

duc . I c y a , I a c u a d d a d f w, w fuchi a h c a i , uch a mic f . thi ba ic cyc f duc a d

ch y ad hi u d i a c a d i a , a d a -u-i c a i duc i ca aci y a quick y a ib .

l ca i I ic duc Atp ba y wa d i by h d bc ca a k . t a a i c w w a i u c a f fi ac f h i h w i h bu hi h- a u ch y duc . I ad, iab ad wa d i by h d i bui d a a u f i c a a b ya d ca aci y a quick y a d a c ff c i y a ib . t duc h faci i y

f i i k, I duc d a a diff a w dwid ha ha 30% f i u f a y duc ca y w u d c f a y

faci i y a hica i .



Wi hi I c i i i , d a d c i ua duc iw h c i ica fac d i i i d ci i x a d a d u ad ica abi i i . I c a I a i y ca i a i i i

a (fab) faci i i wh h i ic chi a c a d, I d ci iw Atp ca aci y, wh h w - chi c i c d, wa

i h y by a u d acc a hi h y ai ab a d ch ica , yw kf c . th w kf c c u d a ici a i ucc i a i a d u

f h Atp a h a k ac dic a d w f a c quih . I ca i c i a a y wa i f u c d a by

i c i , i a u b cau i i d ci i w ab f cific duc d a d c u d b f ca d wi h c fid

cific c c i a d fi a cia i c i w wha ica i h ca i a -i i fab a ha f Atp . I c a , A

d ci i i d a i y w kf c a d hu a u c -a i , uch a a ai abi i y f qua ifi d i a d y u

Intels Interactive Site Selection Process

I a d i a i c f c i ua y a ua i ibAtp i a i i a a i . th c a y ai ai d a f

f ib h c u i f w Atp , which wa ac i y u da d aa c i i ci cu a c a d I c i f i d ch

a y 1996, x cu i a a cifica y d cid d u u a iAtp, qui i 400,000 qua f a d yi a i i ia w kf c f a b a d h w i f p iu ic c . I a a f x c d i a i y f wh had i ifica xi i c i , i c udi h vic p id f si s c i , a w

i x cu i a d aff f a fu c i a a a wi hi h c

F a y w y a i hi d ci i c a w Atp i ,a i a i a cy had b a i a d ac i y a achi ba d c ic c a i . I h a 1980 , CInDe ( a C a ici Cd I i ia i a a a D a ) cifica y d cid d f cu i ff

ad i i i d u c . gi C a rica hi h- ch icaa d y a i y w ab c , a w a a abu da c f bi iCInDe d cid d C a rica i h b w ui d h d f h wi

c ic i du y. I 1993, CInDe b a c u i I . th a iwa h d a f w h b f h ca i a ch f a w Atp wa fH w , by ha i CInDe had a ady i c a d i f cu I , a j c a f h i - CInDe fficia , ach f cu d xc ua ac i I h u h di c fu c i a a a a i , uch a

a i , f ad z i u , hu a u c , duca i , a a

f h.

th fi a f I f a c b a wh I a bfi - c id a i u i ba ic d k a ch i i a ca

h i f c u i . I addi i C a rica, a hi i h A i a, B azi , Chi , Chi a, I dia, I d ia, K a, m xic , pusi a , taiwa ( i c f Chi a) a d thai a d. Whi f a y a

h a i u c i ia w i h d a hi fi a i c ud d a y c id a i :



r Stable Economic and Political Conditions I c udi i i c ic c -di i , a ab i h d a d iab i ica y , a d a a i y a -

a a i a d a i .r Human Resources A uffici u y f f i a a d ch ica x i

i a -u i w k i .r Reasonable Overall Cost Structure r cu i c c id a i uch a

ab a , axa i , a iff , cu f , a d ca i a a ia i .r A Pro-Business Environment g i d i a i i ic ic d a d f i i , i c udi b ab i f c ic ib a iza i .

r Logistics and Manufacturing Lead Times Abi i y hy ica y ducwi h ffici cy, f h a a i a i a i f d a u , a d h

h u h cu a d x c du .r Fast Track Permit Process p i c a y wi hi a i h i ch du

f f u ix h .

U i h i a bu u h c i ia, h I a cu i i i a i f 12ca dida c u i d w : A i a, B azi , Chi , C a rica, I d ia,m xic a d thai a d. th h d ci i wa ad i a y di ify i la iA ica. th f u ai i ca dida w a a y B azi , Chi , C a ricaa d m xic .

th c d a f I c b a quick y h af , i h i f 1996,wi h - i i i d i d a a i id c i , i c udi ca

i wi h fficia , a d ca c u i , acc u i a d awfi a uch a iabi i y a d a a cy f h C a rica a a dfi a cia y . I addi i , i -d h a a y i wa c duc d i a a f c i icai a c I , uch a ca i f a uc u , i c udi h i i a d a

x i c f h f i i . A a hi c i ica a y a , C a ricami i f F i t ad , J r i, a d p id J ma a Fi u wac i y i d a d c a y u i . I a y a hi a , h mi i k

u h cific a h c a i f c di a i f I wi hi h C arica .

th hi d a wa a hi h y i ac i c , du i which a a i y f I x c-u i i i d C a rica w k y add diff c c . CInDe d a h

ad a cy ach i i , wi h a i u ai d i i a a y i a d i i wqui i cific u i a d c a ifica i . o f I i u a di

C a rica a d h c u y a i y a iz a d h i ac I c u dha u h a hy ica i f a uc u , i c udi ai ca ha d i a dI a d c u i f w k y C a rica u c y a d wa .A c d a a f c i ica i a c wa h duca i y , which w u d d

a i u a d i ch ica ki qui a d ca aci y,a w a h f e i h fici cy d i d by I . th qui

w a ch d wi h a cifici y I d , aki h a a ic c c i a i ha h i i f h d a . A fi a c c wa a i f fi a cia c id a i ,

i c udi h a a i c uc u f ax , a d h a da di c i . Whi C a rica ff d a a da d f f ad z x i ,i did ff a y h cia a I a .

th f u h a d fi a a f h c b a wi h I a u c f C a rica c i i n b 1996, h a y a i which h i c i

c b a . m xic d y had b h f u , bu wa i i a d



du c c i c cu cy c i i a d a da y u iDu i hi quick y x cu d bu d ib a fi a a , h c a y a drica ia d a d c c ud d a f a c ac , i c udawa d f a i u i a d ad z au h iza i , a d fi a iz d

c i ch ica ai i i u . Wi hi fi ha u c da , c uc i f h w Atp b a .

Critical Success Factors

A h u h a h c u i a u h I a i , Ch wa ab wi h c i i . th fac ha c ibu

rica ucc ca b u a iz d a h di i : (1) c u y fa(2) ia i ac ic , a d (3) cific c c i .

Country Factors

ma y f h c u y- cific c id a i ha I fa d i Ch u f b ad i ica d ci i a d c ic a i wi h a f i a i , uch a h xi i , ab i ica a d a y

c u y c ic a da. H w , a a ba ic , I a f wi h h f - abi i y a d h abi i y f h a c i c i a f f i i :

r Political and Social Stability A a fu d c acy i c 1948, C a ricahad a ac fu hi y a d , acc ib . th i u wa u d by h u ac a d had a w -acc d ab c ic w h. p y i h a d u f aw w fi

r Economic Openness and Liberalization m c ic ac i i y adi i a

wa c c a d i h a icu u a c u i 1982 wh d bi uch f la i A ica, f c d cha i icy. Af ha i , rica had d d a a ica y away f ici f i ub i u ia i a f c ic ib a iza i . I a icu a , h

d i a iz a u b f a i , d h ca iif d ic i ca i a a ia i , a d ad h C a rica

c ib . I a a ici a d i b h i a a d ba adC a rica a b ac d a d k cific ac i a ac a d f i i , i c udi a da d f ad z ici

uc u i . F i w hi i a y acc d a a qua y- i h ba i . I c u d b fi -ha d a

a c y wi h adi a i hi i h i ak ac , cha ac iz d by a y u c ai d duc a d ca i a

r Focused Development in the Electronics Sector Af C a rica a-i y hi h wa u d cu i f cu d ff i h a ah i d i i du y i i i , yi h cduca d w kf c a a k y diff ia . thi d ci i h d

a y a ac i i a diu - a d hi h- chf i fi , a icu a y i c ic . Whi hi wa a a d i c u i , C a rica a k ica i a d ch ica ai i , aff di i a w-wa bu w -

ab . By i i a xi a y 5% f gDp i duca i , w



ac i bi i ua cu icu u (e i h a a c d a ua ), C a ricawa fi ab a ac a i i c ic a ufac u i .thi u dw k a d h way f I c id a i f C a rica.

r Receptive Investment Environment C a rica c i c i i y ,a d w ki a i hi wi h, f i i u d i ub qu hu-

ia ic c da i I f u i a i a fi a ady a i ih c u y. CInDe wa ab u h w fu f c ch y I h a d f h .

Negotiating Tactics

Whi h fac a ady d c ib d w i a a u a ady i ac i C arica, ia i ac ic a d cific c c i h w c i ica hfi a u c :

r Unified Response C a rica u d i a iz a a c i i ad a a ,f cu i a i h j c wi hi a c -k i c u i y f ,

dia a d bu i . thi c a d a i i f a u ifi d a d c a i a a i wi hi C a rica. CInDe au u , -

fi a iza i a uc u ab d i b id b h h a dbu i h , aki i a ff c i i dia y f h c ii . CInDe wa w d a b c x i uI wa a chi a d h duca h ab u I

qui , c yi a f a d i ha Iwa k w a cia du i h i c i c .

r Extensive Personal Involvement from the Top I i w k w ha hp id f C a rica ch ak a ac i , a i h c ,i i i ha h id a c a , c i a I .p id Fi u a i d h mi i f F i t ad c di a h

a a i u a ci , a ha b ca c i icaa ia i i ifi d. th u h u h c , p id Fi u ka y y w k wi h mi i r i a d e iqu e ff f CInDe h

a hi i i , u i h i i x di a c i ica h j c . H f qu y , f a y a d i f a y, wi h I x cu ii i i C a rica. th p id , h mi i a d h CInDe x cu ii i d I faci i i i h U i d s a .

r Speed I i du y i cha ac iz d by h d f d i ada i a d y h duc if cyc . C a rica d a d fi -ha d ha h

c u d b i h u h u h i i c i c , c x i u uch a add i duca i a i .

r Refusal to Engage in Extraordinary Measures th a a ydid ak x a- a a a , did i ff d a a ic i away kickback , did I qu a y. A h u h h C a rica w

wi i dify aw , ici a d c du acc da I ,h w d i d a y a f i i i C a rica. thi fu -h d h c u y u a i f a a cy a f i i .



r Opinion Management th u wi i a I cia a a w d h h j c d ica y. di a d i wi h h i i ica a y, a w a wi

a u .

Specific Concessions

s cific c c i w ia wi h I i . A a1996, I i i w d h c u y hy ica a d duca i a i f ai ad qua . I addi i , h fi a cia d by h fa ab ha h ff d by h a i . C a rica add d aci u :

r Financial Incentives Whi h f ad z i cw w k w , a ac i , a d acc ib a f i i

addi i a y a d y a 1% ax (which had a i y a d) h a f c a i a i i f a

r Infrastructure th add d fu da a c c ab ui abi i y f h i a i a ai u u u ai caby a i ic f i ai ca i . exi i a

a d f a w ai ca i a . r ad i w acch u h c ibu i f b h id . e y i u w i c qui d c ic di ibu i i had b ad by w d u i i y. th u i i y a d quick y, a d a c i

f I f w ub a i i xcha f fa ab icii du ia u ik I u d a w y d d w - i

r Education I i a y c c wa i achi i a ab ui iz a d ki u h c a y d . A h u h h d

i C a rica wa a ady i ifica y ab h f da i , h c u y ack d a uffici i f a uc u a

hu a u c qui . th d d by a a yzirica hi h ch a d ai i a cu icu a a ai I d qui . A x i i f c da i wa a

a d by, h mi i y f educa i i i dia y ifica a a d d , a w a b a ua

s a i h (f x a ia ) a d e i h f C a rica .

Lessons

A h u h I c i f C a rica wa a hi h y cific , a dha a u iqu fi a a a , ab a i , h a hc u i ha ca b d aw f hi ca :

1. Effective Investment Promotion Strategy and Executionr CInDe a a d h c a a u iqu ca wi h a icu a d , i

a d c ai h a f h c i i .r C a rica f cu d a i i a y ha a

xi i c i i h .r CInDe a ach d I cifica y b cau h c a y i

a a d d a y a ch d b h C a rica xi i c u



a d i a ab x u i a i a ia , cia y i i f a-uc u a d duca i .

r CInDe c i u d a ab u h c i i by c duc i iw a ch a h whi I wa f i du di i c , ab i b hid b i ac a d ua y ia wi h ach h ba d aub a i a cia i f a h bj c i .

2. National Characteristics Inviting to Investorsr C a rica d h ba ic cha ac i ic c a y c i c I

i , i c udi bu i i d a ab d c acy, a ab i h d c -i c ic a d , a d a fu y a a ay .

r th d a d a h fu a d faci i a i a ach f ii , f f c u i .

3. Effective Governmental Skillsr th wa c i y i , w a d, a d c a i i

c u ica i .r th a a a ach d h i i i a c a i

a , f a ad a ia i f i w.r CInDe wa w d c di a a d ca ab i d i , y wa i d -

d f h f a a uc u , aki i a ff c ii dia y.

4. Costa Ricas Positive Perception within the Investor Communityr I addi i c i h hu d f h i i ia d k a ch ha ,

C a rica a u i d h i i ia cu f c i c u i du a i i ,w d- f- u h u a i i a ady d a xi i i .

r C a rica had a ack c d f ucc a ac i a d u if i i , which i a i a d i f fu h i .

r ma k i i i a ai awa f a c u y ia . obj c iub ici y ca b y h fu i c i a c u y ucc uch a ac ic b i a i ai i a , bu i a ha fu i

i i ica if , c u i , i abi i y. eff a d h fi u -i a i a a ik y c i ica - ucc b cau i f

f w h ad .

5. Concessions Need Not Be Firm-Specific r C a rica a d cia fa u iqu I . C c i ad w

u a ab ca ici u . ra h , i f a uc u adju a hai , h ch , a d h f ad z b fi d a i a dw a y d f C a rica c y a d i - d -

a .



Appendix 3Summary Recommendations

This appendix, designed for developing country IPAs and their government policymakers,

extracts key lessons from the Intel case history and applies them to a framework for developing an effective location product and investor services to attract FDI.

For Developing Countries:

1. mak FDI a ac i a a i a i i y, d i a a ia i h i i wi h d i a i a d x cu c i y a

ai d a , i d d f cha i c a d.2. B awa ha c i i i a i a , a d ha h

a i c di i a d i c i a ha b i ci ah ad f h a i . I ad f a i c i a i c a y, ad ici a d i f

f a a icabi i y f a a i a a d f i i .3. I h bu i c u i y i h icy aki dia u h FDI. C a y a ic cha i f i i ca fu y

a d cha i h i c c .4. m i a d u da h c u y b ch a ki wi h h h f

i i f a d ha c i a ff .5. l a i d h ab u ach id a c y , i. ., h fu y i

y bi ic i - u i c u f ach c , a d h w df i c a d i h h c u y.

6. I wi h a - i i i duca i a a a d i fa d h d f ab i h d a d a i , a d

cu f h h c u y. t u h a u chai , a h c uh i hi h duca i , It i f a uc u a d i ic .

7. W k duc icy u c ai y, a i a d FDI.

For IPAs of Developing Countries:

8. e ab i h a FDI a ac i a y uid d by i ba d sWot a a y d i a f w a i ic a c . thb i i du i h ha ch y. C c a h a

9. r a ch a i du i a d c a i . l k f a d a ab uc a i ha h a , i a u i i ach

ha w u d h ca a u h c u y i h a icu a c . pa d ci ca a d af h wi h d i a i .

10. Ha a a i ic, ba a c d a d a a a ab u h di i . D - i , ha h i ha

i c u a a u i , a d ff c i y w i ac h a y way f h .

11. Wid y ad h d w f a ch i ab i hic u y, by a i ub ici y b h a i a y a d ab ad. U i

ia wi h i i i i add c dibic u y a .

12. guid a d u h ab i h f h i , a d idic k i a i fi d. I addi i , c i u c c

a a a h ca a i , a w a wi h k y a a



a h adqua y a ica y x a y w u i i h c a yc u d fu h x a d i h c u y, i c udi u i i i ub- cu a d h i i ia i . thi i h a f h IpA a d

h c u y i a u i h f f -i . I i a i a d c y w a a ady ab i h d c a y ha a ac a w .

A a f hi , h IpA u b i d i icy ad cacy i u f i -

ifica ad a c i h h c u y i c i a .



Appendix 4Intel in Sichuan Province, China

Intel recently set up operations in Chengdu, China. The following information about

this project and Intels motivations was compiled from public announcements and related sources.

I a 2003, h I C a i a u c d i w u d i u Us$ c uc a ic duc a b y a d a (Atp) i

Ch du, Chi a. A c y a u c d c d a ha d h ic c i x c d i 2007, b i i h a I i

sichua u Us$450 i i . th sichua -ba d faci i y i I c d AChi a; i a ady i ac i sha hai h a c a .

th Atp i sichua a b chi u i I ad a c d ackch y. th 800,000 qua f Ch du faci i y wa i i ia y x

y 675, a d c a ha a a y a 3,000 j b i h i . thi 4.5 k f d w w , a h shua iu I a i a Ai i CHi h-t ch I du ia D Z .

Ch du ha a u a i f 10.6 i i a d i h ca i a f Chi a w sichua i c . I i h fi ic duc c ai a sichua a . o h c a i a b i d aw away f Chi a c a a d B iji w wa d h i i f h c u y, i c udi sichad a a f i ifica y w wa a .

th d ci i ca a h Atp i Chi a wa a a y i f ui c a i d a d i A ia a d h x c d ia f h Chi a ha b u d ha h i a c i d a u i ab i

ca c i a i h Chi ha a d fd a d i c a d FDI. ex cu i a I ha aid ha hwa a ac d Ch du by i u iqu a ic i i , u a di

y a d h a ai abi i y a d fici cy f i w k . I addi i , id ha Ch du i c id d c i i y a ba

f wi a a :

r nu b a d qua i y f u i i i , ab a d ch ica i i u ;r I f a uc u f c ic , i c udi ch y a k ;r C uc u c i i a d u ai ab ;r l w-c ab ;r g icy, i c udi g W i c i c u a

i i h i i f h c u y uch a f ia ax

uc u a i a c .



Appendix 5Sources of Information

Web sources are followed by a list of articles and other published materials.

C a Ba k f C a rica (BCCr) w b a : www.bcc .fi.c

CInDe w b a : www.ci d .

ex p i A cy (proComer) w b a : www. c .c

I C a rica w b a : www.i .c /c a ica

AmChams Business Costa Rica a azi ; CInDe C i f I : Aa ic a a ac i , Ju 2004

Ba qu , ma i ; I i i cha i c u ica i a d ab ...,"La Nacin, s b 2003

B , Ad ia ; Wha h I ff c i a ab u , Actualidad Econmica a azi#54, 2001

Ca i , ma ia; C a rica a ac i hi h- ch i du i ,The Journal of Commerce, A i 16, 1997

D ad , ed a ; th a mnC a h c u y c i i ak d,La Nacin, A i 29, 2002

Daz, r d i ; I , di i f gDp?,La Repblica, Au u 9, 2004

D a , micha ; C a rica hi h- ch a ,San Jose Mercury News,Au u 10, 1997

Export Today; C a rica: si ic rai f , Ju y 1998

H a, mau ici ; I i i i i h c u y,La Nacin, Ju 27,1997

luk wi cki, D bbi ; I , uch ha x ,La Repblica, A i 14, 1999

m , H wa d; t adi ac ,Global Finance, oc b 1998

m a, e i ia; I i 700 i i y a i hu a d ,La Nacin,s b 25, 2004

mu i , n ; Fi u c i iciz h d i f i i ,El Financiero, Ju 4-10, 2001La Nacin; t ch y x d , s b 15, 2004

La Nacin; B a 25% f a i a x , s b 25, 2004

La Nacin; t ch y b c h w f educa i , oc b 2, 2004

n , r y; I si s c i D ci i i la i A ica,Thunderbird International Business Review, th A ica g adua sch f I a i ama a , A i 2000



p i a li a, ed a d ; W d-C a C u i i ,Industry Week , A i 6, 1998

Qu ada, Wi b h; FDI c ak by I ,El Financiero, Au u 9-15, 2004

Qui , sa ; C a A ica ti ,World Trade, ma ch 1998

r d u z-C a , A d ; C a rica D s a y ba d Ca i a a d t ch y: h w i h , h i ac f I , a d c u i , Hu a D r 2001, UnDp, F b ua y 2001r ja , J e iqu ; m f i i i a ici a d,La Nacin, Au u9, 2004

s yf , J i ; C a rica ak ch i ch,San Jose Mercury News, A i 26,2001

sh h d , na cy; I I id ,Continental magazine, oc b 1997

s a , D b a; Wha i a swi i p ,Impact, I a i a Fi a cC a i /W d Ba k g u , su 1998

s a , D b a; A ac i Hi h t ch y I : I C a riF i I Ad i y s ic , I a i a Fi a c CBa k g u , 1998s , B ad; A si ic r ub ic,Newsweek , Au u 28, 2000

v , J ., th a t.; C a rica sa pi ch lu Hi h-t ch gia ik a d mic f ,The Wall Street Journal, A i 2, 1998

Wa d, J h ; t ica Chi , c f a u ,The Inside Line, F b ua y 1999

W , l ui t.; r i i i ma k i a C u y: p i a a t f AF i I , Ha a d g adua sch f Bu i Ad i ioc

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